Patent Docs

CRISPR Interference Parties Propose Motions

By Kevin E. Noonan --

The parties (University of California/Berkeley, the University of Vienna, and Emmanuelle Charpentier, Junior Party, and The Broad Institute, Massachusetts Institute of Technology, and Harvard University, Senior Party) to the newly declared interference over patents for CRISPR technology (see "CRISPR Battle Joined Again"), yesterday submitted to the Patent Trial and Appeal Board their proposed motions for the initial phase of the interference.  As is typically the case in these submissions, each party filed motions to place them in the best procedural position for the main event in the interference, a determination of who deserved priority to CRISPR, specifically embodiments of the technology for use in eukaryotic cells.

As a reminder, an interference proceeds in two stages.  The first stage involves the parties presenting motions that can modify the count, have certain claims declared outside the scope of the count (or vice versa), seek to establish an earlier priority date, and ask for a finding that their opponents' claims are invalid under any of the provisions of the patent statute.  If these motions are not decided in a way that would disqualify one or both parties, then the interference will move to a second stage, where the Junior Party (Berkeley, unless it can establish an earlier priority filing date) will present its proofs of conception and reduction to practice and the Senior Party will be permitted to oppose.  The Senior Party is under no obligation to present proofs earlier than its earliest filing date unless the Junior Party evinces evidence of (at least) earlier conception.  In practice, the parties can both be expected to submit their priority evidence.

Berkeley's motions reflected their position before the U.S. Patent and Trademark Office during examination that they deserve priority to eukaryotic embodiments of CRISPR (despite the decisions to the contrary by the PTAB and the Federal Circuit).  Under the acronym "CVC" (for California, Vienna, and Charpentier, the three parties challenging the Broad's entitlement to eukaryotic CRISPR), Junior Party's Motion 1 is an "expedited" miscellaneous motion under 37 C.F.R. § 41.121(a)(3) for benefit of an earlier non-provisional application and for the Board to redeclare the interference with CVC as the Senior party.  The basis for this motion is that the specification of the applications-in-interference have an identical specification to CVC's USSN 13/842,859, filed 3/15/2013 (pre-AIA).  CVC asks the Board to take these actions sua sponte because identical specifications are entitled to priority under 35 U.S.C. § 120.  To aid the Board, CVC provides in an Appendix a diagram showing how its applications are related:

Interestingly, PTO documents show that the Examiner and interference specialists recommended giving CVC the priority benefit to the '859 application.

CVC's Motion 2 requests benefit of priority to earlier provisional and non-provisional applications, specifically:

[E]ach of CVC's involved applications 15/947,680; 15/981,807; 16/136,168; and 16/136,175 is a continuation of U.S. Patent Application No. 14/685,504 ("the '504 application"), filed on April 13, 2015.  Each of CVC's involved applications 15/947,700; 15/947,718; 15/981,808; 15/981,809; 16/136,159; and 16/136,165 is a continuation of U.S. Patent Application No. 15/138,604 ("the '604 application), filed on April 26, 2016, which in turn is a continuation of the '504 application.  The '504 application is a continuation of U.S. Patent Application No. 13/842,859 ("the '859 application"), filed on March 15, 2013, which claims priority benefit to each of the following provisional applications: U.S. Provisional Application No. 61/652,086, filed on May 25, 2012 ("the '086 provisional" or "Provisional 1"); U.S. Provisional Application No. 61/716,256, filed on October 19, 2012 ("the '256 provisional" or "Provisional 2"); U.S. Provisional Application No. 61/757,640, filed January 28, 2013 ("the '640 provisional" or "Provisional 3"); and U.S. Provisional Application No. 61/765,576 ("the '576 Provisional" or "Provisional 4"), filed on February 15, 2013.

In view of the extensive history of these filings, CVC asks the Board to increase the page limit for its brief.

Motion 3, under 37 C.F.R. § 41.121(a)(1), asks the Board to treat the Broad's claims under the changes in the law effected by the Leahy-Smith America Invents Act with regard to Section 102 and 103 of the Patent Act, and for judgment that these claims are unpatentable under 35 U.S.C. § 103 over U.S. Patent Application Publication No. 2016/0298138 to Sigma in view of extensive prior art (122 references) contained in another Appendix.  Ironically, this application is the basis for Sigma-Aldrich's "extraordinary" petition for the PTAB to redeclare the interference (see "Sigma-Aldrich Wants Its Piece of CRISPR Pie") to include this application.  The basis for Motion 3 is that the Sigma application was filed six days earlier than the earliest Broad priority application, and that due to irregularities in the Broad's filing, they cannot "swear behind" this reference.  Once again, CVC asks the Board to increase the page limits on this motion (in this case because there are 415 involved Broad claims at issue).  CVC also submits a contingent motion, Motion 4 for judgment of unpatentability if the Broad applications and patents are entitled to pre-AIA treatment, under 35 U.S.C. § 103 over US 2016/0298138 to Sigma in view of extensive prior art contained in the Appendix.

CVC's Motion 5, under 37 C.F.R. § 41.121(a)(1) asks for judgment of unpatentability under 35 U.S.C. § 102(f) or (if post-AIA) 35 U.S.C. § 115(a) for "failure to name all inventors of the alleged invention.  [According to its proposal] CVC will demonstrate that Broad deliberately misidentified the inventors on its involved patents and applications . . . ."  Proper inventorship is important in the interference, inter alia, because the Board needs to know whose testimony can corroborate and whose needs to be corroborated under interference practice, where the uncorroborated testimony of an inventor is given no weight; see, Kolcraft Enters. v. Graco Children's Prods., Nos. 2018-1259, 2018-1260, 2019 U.S. App. LEXIS 19751 (Fed. Cir. July 2, 2019).  The factual bases for this motion are differences between the named inventors in the patents- and applications-in-interference and the inventors named in a declaration by the Broad's patent attorney during a European opposition (EP 277146); it may be recalled that such irregularities involving a Rockefeller University inventor (Dr. Luciano Marraffini) not named in the EP application was the basis for that patent to be invalidated (see "The CRISPR Chronicles -- Broad Institute Wins One and Loses One").

CVC's most aggressive proposed motion is Motion 6 under 37 C.F.R. § 41.121(a)(1) for inequitable conduct.  According to CVC, "Broad made at least one affirmative material misstatement during prosecution of each of Broad's involved patents, applications, or parent applications to which they claim priority" -- specifically, in a declaration by named inventor Zhang regarding actual reduction to practice of CRISPR-Cas9 in eukaryotic cells prior to May 2012.  CVC asserts that these statements are untruthful because the CRISPR system did not comprise tracrRNA, which is necessary for CRISPR to be functional.  CVC attempts to avoid the fate of a similar motion from the first CRISPR interference (for which the Board denied permission) on grounds that it is undisputed that tracrRNA is necessary for CRISPR function, using disclosure from U.S. Provisional Patent Application No. 61/736,527 as well as in the Broad's involved patents and independent prior art.  CVC also asserts that Zhang's "conception" arose only after reading a Berkeley prior art disclosure.  The proposal for this motion extensively analyzes purported evidence for actual reduction to practice to show the Broad's asserted failure, alleging that the Broad "cherry-picked data" that "intentionally omitted the context that shows his claims of successful DNA cleavage to be false."  This motion applies to all the Broad's patents- and applications-in-interference because the alleged untruthful statements were submitted in all applications.

CVC also makes similar allegations for another declaration submitted by a different inventor, which they contend evinced "a larger pattern of deception."  These allegations are supported by an e-mail from a Zhang lab member and named inventor on the Broad's provisional application (albeit in a context where there seems to exist an ax to grind against Dr. Zhang):

The 15-page declaration of [Feng Zhang] and Le Cong's luciferase data is mis- and overstated to change the examiner's decision, which seems to be a joke. . . .

After seeing your in virto [sic, in vitro] paper, Feng Zhang and Le Cong quickly jumped to the project without letting me know.  My lab notebooks, emails and other files like dropbox or gel pictures recorded every step of the lab's failure process.  I am willing to give more details and records if you are interested or whoever is interested to clear the truth. . . .

We did not work it out before seeing your paper, it's really a pity.

CVC's final Motion 7 is a miscellaneous motion under 37 C.F.R. § 41.121(a)(3) to add CVC's U.S. Application Nos. 16/276,361; 16/276,365; 16/276,368; and 16/276,374 to the interference.  CVC also provides a pro forma motion for priority, to be decided during the priority phase of the interference if it is not resolved beforehand.

The Broad's motions are predicated on their contention that this interference is "barred by res judicata, collateral estoppel, and law of the case" over the earlier-concluded interference (No. 106,048).  The Broad notes that the difference between the Count of the '048 interference and the Count in this interference as declared is that the prior Count did not require specific (covalent) linkage or fusion between the guide and tracr sequences, whereas that linkage was the basis for allowability of CVC's applications in this interference.  Accordingly, the Broad asks the PTAB to limit claims in interference to those having this limitation.  The Broad's Motion 1 under 37 C.F.R. §§ 41.121(a)(1)(iii) and 41.208(a)(1) is for judgment based on interference estoppel, citing MPEP § 2308.03(b): "A judgment of no interference-in-fact bars any further interference between the same parties for claims to the same invention as the count of the interference."  The Broad asks that this motion be expedited.  Motion 2 under 37 C.F.R. §§ 41.121(a)(1)(iii) and 41.208(a)(1) is related, for judgment based on CVC's failure to add a claim in the '048 interference reciting the linkage limitation, citing Woods v. Tsuchiya, 745 F.2d 1571, 1582 (Fed. Cir. 10 1985), and Ex parte Aoki, No. 2012-010117, 2015 WL 3827164 (P.T.A.B. June 15, 2015), for support.  The Broad further requests the Board issue a Notice to Show Cause (sub silentio apparently characterized as "Motion 3") why this interference is not precluded by judgment in the earlier '048 interference, based on the "showing" that CVC cannot antedate actual reduction to practice of applying CRISPR to eukaryotic cells in view of evidence of record in the '048 interference (CVC "cannot win on the merits" according to this portion of the Broad's argument).

As a hedge against failing to prevail on these motions, Motion 4 (contingent) under 37 C.F.R. §§ 41.121(a)(1)(i) and 41.208(a)(2) asks the Board to substitute the count with an alternative count that would be "broad enough to cover Broad's best proofs," specifically:

Proposed Count 2

A method comprising:
introducing into, or expressing in, a eukaryotic cell having a DNA molecule,
(I) a Cas9 protein or a nucleotide sequence encoding the Cas9 protein, and 
(II) RNA or a nucleotide sequence encoding the RNA, the RNA comprising:
    (a) a targeter-RNA or a first RNA, the first RNA comprising a first ribonucleotide sequence and a second ribonucleotide sequence, and
    (b) an activator-RNA or a second RNA,
wherein (II) (a) and (II) (b) are fused to one another or are covalently linked to one another with intervening nucleotides; and
wherein, in the eukaryotic cell, the activator-RNA or the second RNA form an RNA duplex with the targeter-RNA or the second ribonucleotide sequence, and the targeter-RNA or the first ribonucleotide sequence directs the Cas9 protein to a target sequence of the DNA molecule, and the DNA molecule is cleaved or edited or at least one product of 20 the DNA molecule is altered.

Should the Board substitute the present Count for this one, the Broad argues that only "claims 4, 11, and 18 of U.S. Patent No. 8,697,359; claim 5 of U.S. Patent No. 8,771,945; claim 5 of U.S. Patent No. 8,906,616; and claim 8 of U.S. Patent No. 8 9,840,713" should remain in the interference. Similar Motion 5 (contingent) under 37 C.F.R. 1 §§ 41.121(a)(1)(i) and 41.208(a)(2) asks the Board to substitute or add Count 3 to the interference:

Proposed Count 3

A method, in a eukaryotic cell, of cleaving or editing a target DNA molecule, or altering expression of at least one product encoded by the target DNA molecule, the method comprising:
    contacting, in a eukaryotic cell, a target DNA molecule having a target sequence with an engineered and/or non-naturally-occurring Type II Clustered 8 Regularly Interspaced Short Palindromic Repeats (CRISPR)-CRISPR associated 9 (Cas) (CRISPR-Cas) system comprising:
a) a Cas9 protein,
and
b) RNA comprising
    i) a targeter-RNA that is capable of hybridizing with the target sequence of the DNA molecule or a first RNA comprising (A) a first sequence capable of hybridizing with the target sequence of the DNA molecule and (B) a second sequence; and
    ii) an activator-RNA that is capable of hybridizing to the targeter-RNA to form an RNA duplex in the eukaryotic cell or a second RNA comprising a tracr sequence that is capable of hybridizing to the second sequence to form an RNA duplex in the eukaryotic cell,
wherein, in the eukaryotic cell, the targeter-RNA or the first sequence directs the Cas9 protein to the target sequence and the DNA molecule is cleaved or edited or at least one product of the DNA molecule is altered.

This claim is ("essentially") identical to the Count of the '048 interference for which the Broad asserts another "best proofs" justification.  The Broad takes the position that CVC would be estopped from showing priority to claims corresponding to this count based on the outcome of the '048 interference.

Motion 6 through Motion 9, all under 37 C.F.R. §§ 41.121(a)(1)(iii) and 41.208(a)(2) ask the Board to designate most of the Broad's claims as not corresponding to any or various permutations of the counts, in an effort to limit the Broad's exposure to losing their claims.  Motion 10 under 37 C.F.R. §§ 41.121(a)(1)(ii) and 41.208(a)(3) requests priority benefit of the Broad's prior applications, having an earliest priority date of December 12, 2012; in view of the extensiveness of the list the Broad requests "at least" 35 pages for its motion and brief.  Motion 11 under 37 C.F.R. §§ 41.121(a)(1)(iii) and 41.208(a)(1) seeks judgment against Berkeley on the grounds that the CVC claims are unpatentable for failure to satisfy the written description and/or enablement requirements of 35 U.S.C. § 112(a) and under 35 U.S.C. § 102(a) and/or 35 U.S.C. § 102(e) and 35 U.S.C. § 103, based on "the PTAB's binding finding that a POSA in 2012 would require the results of successful eukaryotic experiments to have a reasonable expectation of success that CRISPR-Cas9 could be made to work in eukaryotic cells, and given that D1 and D2 indisputably fail to disclose any eukaryotic experiments," and citing numerous scientific references (including Broad references).  And Motion 12 under 37 C.F.R. §§ 41.121(a)(3) asks the Board to require CVC to keep the Broad and the Board apprised of any notice of allowance in any pending, related applications.  Finally, the Broad also submits a pro forma motion for priority.

The Board has set August 5th as the date for a teleconference with the parties jointly; shortly thereafter (typically less than a week) the Board will issue an Order notifying the parties as to which motions they are authorized to file and which have been deferred or denied.  During the call the parties are able to inform the Board more specifically of the bases for their motions, provide a proffer if the Board needs additional evidence or information, and provides opposing parties the opportunity to give the Board their views.  With the Order on which motions are permitted the Board will also set a briefing schedule; a sample schedule is as follows:

TIME PERIOD 1

File motions
File (but serve one business day later) priority statements

TIME PERIOD 2

File responsive motions to motions filed in TIME PERIOD 1

TIME PERIOD 3

File oppositions to all motions

TIME PERIOD 4

File all replies

TIME PERIOD 5

File request for oral argument
File motions to exclude evidence
File observations

TIME PERIOD 6

File oppositions to motions to exclude
File response to observations

TIME PERIOD 7

File replies to oppositions to motions to exclude

DEFAULT ORAL ARGUMENT DATE

The Board permits the parties to stipulate to extensions and revisions to the schedule except for the last three dates; the oral argument date is (relatively) inviolate (unless the Board needs to reschedule) and occurs about seven months after the end of Time Period 1.

Patent Docs will provide the details of the Board's decisions on which motions it will permit the parties to file when they become available.

Sigma-Aldrich Wants Its Piece of CRISPR Pie

By Kevin E. Noonan --

On Friday, Sigma-Aldrich filed a self-described "extraordinary" petition to the Director of the U.S. Patent and Trademark Office (under 37 C.F.R. §§ 1.181-1.183) and the Chief Judge of the PTAB (under 37 C.F.R. § 41.3 and § 41.103), asking that the USPTO declare an interference between itself and the University of California, Berkeley "parallel" to the one recently declared between Berkeley and the Broad Institute and its companion institutions (see "CRISPR Battle Joined Again").

The petition is extraordinary because Sigma's claims are not in condition for allowance, which is a prerequisite for the Office declaring an interference.  The basis for Sigma's prayer for extraordinary relief is that the Examiner reviewing its pending applications, U.S. Application Nos. 15/188,911, 15/188,924, and 15/456,204, has refused to find that two Berkeley provisional applications (U.S. Application Nos. 61/652,086 and 61/716,256) do not anticipate nor render obvious its claims to applications of CRISPR in eukaryotic cells, despite determinations to the contrary with regard to Broad et al. patents having later priority dates by the Patent Trial and Appeal Board (see "PTAB Decides CRISPR Interference -- No interference-in-fact" and "PTAB Decides CRISPR Interference in Favor of Broad Institute -- Their Reasoning") and Federal Circuit (see "Regents of the University of California v. Broad Institute, Inc. (Fed. Cir. 2018)").  The very similar claims in Sigma's three pending applications read as follows:

U.S. Application No. 15/188,911:

1.  A method for integrating an exogenous sequence into a chromosomal sequence of a eukaryotic cell, the method comprising:
    a) introducing into the eukaryotic cell (i) at least one RNA-guided endonuclease comprising at least one nuclear localization signal or codon-optimized nucleic acid encoding at least one RNA-guided endonuclease comprising at least one nuclear localization signal, wherein the at least one RNA-guided endonuclease is a clustered regularly interspersed short palindromic repeats (CRISPR)/CRISPR associated (Cas) (CRISPR-Cas) type II system protein and the CRISPR-Cas type II system protein is a Cas9 protein, (ii) at least one guide RNA or DNA encoding at least one guide RNA, and (iii) at least one donor polynucleotide comprising the exogenous sequence; and
    b) culturing the eukaryotic cell such that the at least one guide RNA guides the at least one RNA-guided endonuclease to a target site in the chromosomal sequence where the RNA-guided endonuclease introduces a double-stranded break, the target site in the chromosomal sequence is immediately followed by a protospacer adjacent motif (PAM), and repair of the double-stranded break by a DNA repair process leads to integration of the exogenous sequence into the chromosomal sequence.

U.S. Application No. 15/188,924:

1.  A method for modifying a chromosomal sequence in a eukaryotic cell, the method comprising:
    a) introducing into the eukaryotic cell (i) at least one RNA-guided endonuclease comprising at least one nuclear localization signal or codon-optimized nucleic acid encoding at least one RNA-guided endonuclease comprising at least one nuclear localization signal, wherein the at least one RNA-guided endonuclease is a clustered regularly interspersed short palindromic repeats (CRISPR)/CRISPR associated (Cas) (CRISPR-Cas) type II system protein and the CRISPR-Cas type II system protein is a Cas9 protein, (ii) at least one guide RNA or DNA encoding at least one guide RNA, and, optionally, (iii) at least one donor polynucleotide; and
    b) culturing the eukaryotic cell such that the at least one guide RNA guides the at least one RNA-guided endonuclease to a target site in the chromosomal sequence where the RNA-guided endonuclease introduces a double-stranded break, the target site in the chromosomal sequence is immediately followed by a protospacer adjacent motif (PAM), and repair of the double-stranded break by a DNA repair process leads to modification of the chromosomal sequence.

U.S. Application No. 15/456,204:

1.  A method for modifying a chromosomal sequence in a eukaryotic cell by integrating a donor sequence, the method comprising introducing into the eukaryotic cell: (i) a Clustered Regularly Interspersed Short Palindromic Repeats (CRISPR)/CRISPR-associated (Cas) (CRISPR-Cas) type II protein linked to at least one nuclear localization signal (NLS) or a nucleic acid encoding the CRISPR-Cas type II protein linked to at least one NLS, wherein the CRISPR-Cas type II protein is a Cas9 protein, and the nucleic acid encoding the CRISPR-Cas type II protein is codon optimized for expression in the eukaryotic cell; (ii) a guide RNA or DNA encoding the guide RNA, wherein the guide RNA comprises a first region that is complementary to a target site in the chromosomal sequence that is immediately followed by a protospacer adjacent motif, and a second region that interacts with the CRISPR-Cas type II protein; and (iii) a donor polynucleotide comprising the donor sequence;
    wherein the guide RNA guides the CRISPR-Cas type II protein to the target site in the chromosomal sequence, the CRISPR-Cas type II protein introduces a double stranded break at the target site, and repair of the double-stranded break by a DNA repair process leads to integration or exchange of the donor sequence into the chromosomal sequence.

The relationship between patents and applications owned by Berkeley, the Broad, and Sigma are set forth in Figure 1 of the petition graphically as follows:

The Examiner (who is the same Examiner responsible for allowing Berkeley's patents), according to the petition, has provided no legal justification for refusing to acknowledge what Sigma contends is the precedential value of the decisions in the earlier interference.  Sigma's position is that if the Doudna et al. provisional applications did not provide sufficient support to find the Broad's claims obvious (in an interference context) they cannot support a determination of obviousness in ex parte patent prosecution involving Sigma's applications.  Sigma further alleges that the evidence adduced in its ex parte examination of the three identified pending applications is "even more extensive" than the record in the earlier Berkeley/Broad interference; here, Sigma asserts that it has provided "multiple declarations from prominent experts explaining in even greater detail why (a) UC's disclosure of CRISPR-Cas9 in a prokaryotic environment does not render obvious Sigma-Aldrich's CRISPR-Cas9 eukaryotic claims, and (b) UC's provisional applications (UC P1 and UC P2) do not enable or adequately describe use of CRISPR-Cas9 in eukaryotic cells."

According to the petition, the Examiner merely responds that their evidence is "unpersuasive" in refusing to recognize the allowability of their pending claims (in the latest Office Action, in the '911 application, Sigma asserts that this phrase or its equivalent was repeated "over 70 times").  (It is only fair to the Examiner to note that there was an in-person interview between Sigma's representatives and "the Examiner, her Supervisory Patent Examiner, two Interference Practice Specialists, and the Group Art Unit Director" that did not resolve the issue in Sigma's favor.)  Sigma-Aldrich argues that "[f]or the effective administration of justice, efficiencies of the USPTO and the parties, conservation of considerable valuable resources, and the public interest" the new interference should be declared (between Berkeley and Sigma in their petition; it is difficult to see the USPTO not including the Broad et al. patents in any such interference).  The alternative, according to the petition, would be appeal to the PTAB over the obviousness rejection and, if need be, further appeal to the Federal Circuit.

Confident of its position, Sigma contends that this would be contrary to the Director's recent pronouncements (albeit in a different context) regarding there being a "level playing field" for all applicants and other parties; this portion of the petition waxes wroth regarding the "palpable" unfairness to Sigma and that "[i]n today's highly charged political environment, certainly the Director and CAPJ are sensitive to criticism leveled at the Agency regarding issues of fairness and equity."  In addition, Sigma notes that it would be "grossly inefficient" for the USPTO to conduct the current interference between Berkeley and the Broad and then have to conduct a further interference between Sigma and either or both of the other parties.  Finally, the petition notes the public interest in resolving the priority and ownership disputes between the several parties to prevent inhibiting development of the technology due to uncertainties regarding licensing and freedom to operate issues.

Should the Director and/or Chief Judge grant Sigma its requested relief, it is likely that the current interference will be redeclared naming all three parties, the patents and applications currently in interference, and the Sigma-Aldrich applications (with their attendant priority claims).  The interfering subject matter has been set forth in alternate counts, corresponding either as claim 18 of the Broad's U.S. Patent No. 8,697,359 (dependent on claim 15), which taken together recites the following invention:

An engineered, programmable, non-naturally occurring Type II CRISPR-Cas system comprising a Cas9 protein and at least one guide RNA that targets and hybridizes to a target sequence of a DNA molecule in a eukaryotic cell, wherein the DNA molecule encodes and the eukaryotic cell expresses at least one gene product and the Cas9 protein cleaves the DNA molecules, whereby expression of the at least one gene product is altered; and, wherein the Cas9 protein and the guide RNA do not naturally occur together, wherein the guide RNAs comprise a guide sequence fused to a tracr sequence.

(where the underlined portion recites the relevant language from claim 18) and claim 156 of Berkeley's U.S. Patent Application No. 15/981,807:

A eukaryotic cell comprising a target DNA molecule and an engineered and/or non-naturally occurring Type II Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)-— CRISPR associated (Cas) (CRISPR-Cas) system comprising
    a) a Cas9 protein, or a nucleic acid comprising a nucleotide sequence encoding said Cas9 protein; and
    b) a single molecule DNA-targeting RNA, or a nucleic acid comprising a nucleotide sequence encoding said single molecule DNA-targeting RNA; wherein the single molecule DNA-targeting RNA comprises:
        i) a targeter-RNA that is capable of hybridizing with a target sequence in the target DNA molecule, and
        ii) an activator-RNA that is capable of hybridizing with the targeter-RNA to form a double-stranded RNA duplex of a protein- binding segment,
    wherein the activator-RNA and the targeter-RNA are covalently linked to one another with intervening nucleotides; and
    wherein the single molecule DNA-targeting RNA is capable of forming a complex with the Cas9 protein, thereby targeting the Cas9 protein to the target DNA molecule, whereby said system is capable of cleaving or editing the target DNA molecule or modulating transcription of at least one gene encoded by the target DNA molecule.

There is no time frame for the petition to be considered much less granted, but as Sigma notes, the latest Berkeley-Broad interference is in the earliest stage; the parties must submit their proposed motions to the Board by July 30th and a teleconference between the Board and the parties is scheduled for August 5th.  None of these dates is written in stone, of course, and the Director or the Board could postpone progress in the pending interference to consider Sigma's request.  That would be the logical course; whether it is the Office's course remains to be seen.

New CRISPR Interference: The Details

By Kevin E. Noonan --

On June 24th, the U.S. Patent and Trademark Office declared an interference (No. 106,115) between patents and applications owned by the Regents of the University of California, the University of Vienna, and Emmanuelle Charpentier (designated in the interference Declaration as the Junior Party) and the Broad Institute, Inc., the Massachusetts Institute of Technology, and the President and Fellows of Harvard College (designated as the Senior Party).  As in the earlier interference between these parties on this subject matter, Administrative Patent Judge Deborah Katz was designated by the Office to manage the interference.

The Declaration explains the determination of which party is Senior and which Junior, by noting that the Office has not given the benefit of any earlier-filed priority application to either party.  To the extent that Berkeley's applications were all filed last fall (as part of an apparent strategy to have this interference declared, although they did not formally provoke it), the decision not to grant the parties benefit mandates the Senior/Junior party designations.  However, it can be expected that the parties each will file motions during the first phase of the interference to establish the benefit of the earliest priority possible.

The count of the interference is set forth in the alternative, either as claim 18 of the Broad's U.S. Patent No. 8,697,359 (dependent on claim 15), which taken together recites the following invention:

An engineered, programmable, non-naturally occurring Type II CRISPR-Cas system comprising a Cas9 protein and at least one guide RNA that targets and hybridizes to a target sequence of a DNA molecule in a eukaryotic cell, wherein the DNA molecule encodes and the eukaryotic cell expresses at least one gene product and the Cas9 protein cleaves the DNA molecules, whereby expression of the at least one gene product is altered; and, wherein the Cas9 protein and the guide RNA do not naturally occur together, wherein the guide RNAs comprise a guide sequence fused to a tracr sequence.

(where the underlined portion recites the relevant language from claim 18).

Claim 156 of Berkeley's U.S. Patent Application No. 15/981,807 provides the alternative count language:

A eukaryotic cell comprising a target DNA molecule and an engineered and/or non-naturally occurring Type II Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)-— CRISPR associated (Cas) (CRISPR-Cas) system comprising
    a) a Cas9 protein, or a nucleic acid comprising a nucleotide sequence encoding said Cas9 protein; and
    b) a single molecule DNA-targeting RNA, or a nucleic acid comprising a nucleotide sequence encoding said single molecule DNA-targeting RNA; wherein the single molecule DNA-targeting RNA comprises:
        i) a targeter-RNA that is capable of hybridizing with a target sequence in the target DNA molecule, and
        ii) an activator-RNA that is capable of hybridizing with the targeter-RNA to form a double-stranded RNA duplex of a protein- binding segment,
    wherein the activator-RNA and the targeter-RNA are covalently linked to one another with intervening nucleotides; and
    wherein the single molecule DNA-targeting RNA is capable of forming a complex with the Cas9 protein, thereby targeting the Cas9 protein to the target DNA molecule, whereby said system is capable of cleaving or editing the target DNA molecule or modulating transcription of at least one gene encoded by the target DNA molecule.

As a reminder, an interference proceeds in two stages.  The first stage involves the parties presenting motions that can modify the count, have certain claims declared outside the scope of the count (or vice versa), seek to establish an earlier priority date, and ask for a finding that the claims are invalid under any of the provisions of the patent statute.  It will be recalled that the Broad and Berkeley attempted to file such motions in the first interference (see "CRISPR Interference Motions Set").  If these motions are not decided in a way that would disqualify one or both parties, then the interference will move to a second stage, where the Junior Party (Berkeley, unless it can establish an earlier priority filing date) will present its proofs of conception and reduction to practice and the Senior Party will be permitted to oppose.  The Senior Party is under no obligation to present proofs earlier than its earliest filing date unless the Junior Party evinces evidence of (at least) earlier conception.  In practice, the parties can both be expected to submit their priority evidence.

The declaration also contains the scheduling statement that there will be a telephone conference between APJ Katz and the parties on August 5th, and that four business days prior, the parties will submit a list of motions it proposes to file.  (Except in instances where this list is vanishingly small, it is unlikely that the Board will grant the parties' motions to file all these proposed motions.)  In the last interference, the Broad filed a motion that there was no interference-in-fact (unlikely in this interference); several motions that the Broad's dozen patents involved in the interference should be accorded the benefit of priority to 16 provisional applications; a motion that the University's claims corresponding to the count are unpatentable for lack of written description (granted); a motion that the University's claims corresponding to the count are unpatentable for lack of enablement (deferred); motions that the University claims are not patentable over "certain prior art" (deferred); and motions for access to pending Berkeley applications (which was denied).  Berkeley's motions were in some ways more compelling, to the extent they suggested grounds for invalidating the Broad patents that were foreclosed by the PTAB's determination that there was no interference-in-fact.  These motions included:  a motion that all of the claims of all of the Broad's patents are invalid over the publication of the University's application in interference, based on an error in how the Broad's application was filed involving changes resulting from the America Invents Act (deferred); five motions to change the count (one was granted but mooted by the Board's decision); a motion for priority benefit to an earlier provisional application (granted); a motion that the Broad's involved claims are anticipated by certain prior art (deferred); a motion that each of the Broad's patents are unpatentable under the doctrine of obviousness-type double patenting (deferred); a motion that each of the Broad's patents are unpatentable for improper inventorship (deferred); and a motion that each of the Broad's patents were obtained by inequitable conduct (denied).

What motions the parties file should be available on the PTAB website shortly after the August 5th teleconference and will be the subject of a future post.

Food Marketing Institute v. Argus Leader Media (2019)

By Joshua Rich --

Although patentees generally do not have great concerns about the Freedom of Information Act (FOIA) because of the U.S. Patent and Trademark Office's secrecy requirements, they may lose control over their information under FOIA if they submit it to other parts of the government.  Prior to the Food Marketing Institute case, companies faced the possibility that they could lose their trade secrets if they sought government contracts if they could not show that disclosure would cause them substantial competitive harm.  Now, those companies need only show that they -- and the government -- intended to keep the information secret in order to prevent disclosure under FOIA.

In the Food Marketing Institute case, a South Dakota newspaper was working on an article on food stamp fraud; to support the article, it submitted a FOIA request to get store-level data for every store in America that accepted Supplemental Nutrition Assistance Program (SNAP) benefits.  FOIA generally requires Federal agencies to disclose public records, except as provided by statute.  One of the exceptions is Exemption 4, which shields from disclosure "trade secrets and commercial and financial information obtained from a person and privileged or confidential."[1] The Supreme Court was asked to determine the scope of Exemption 4.  In a 6-3 decision, it held that information would be exempted from disclosure if it was private or secret and the government had provided some assurance that the information would remain secret -- it did not require any showing of competitive harm that would come to the person from whom the information was obtained if the information was disclosed.

In 2011, the Argus Leader newspaper of Sioux Falls, South Dakota learned of concerns of "retailer trafficking" of SNAP benefits, where retailers exchange SNAP benefits for cash.  Under SNAP, program participants usually use electronic benefit cards to buy food from eligible retailers and the sales information is electronically transferred to a state electronic benefits processor who approves or denies the transaction.  The state processor then reports the information to the U.S. Department of Agriculture (which administers the SNAP program for the federal government).  The reporter working on the story therefore filed a FOIA request with the USDA asking for information including store-level information on SNAP benefits for every store in the United States (about 320,000 stores) over a five year period.

The USDA refused to produce the store-level information on grounds including Exemption 4.  Eventually, the District Court applied the test required by the U.S. Court of Appeals for the Eighth Circuit, which had adopted the D.C. Circuit's test from National Parks & Conservation Assn. v. Morton, 498 F.2d 765 (D.C. Cir. 1974).  Specifically, the District Court required to the USDA to show that the information was not only secret, but also "likely . . . to cause substantial harm to the competitive position of the person from whom the information was obtained."[2] The District Court held a trial where witnesses for the USDA testified that retailers closely guard their store-level data and that disclosure would harm their stores' competitive positions by allowing competitors to model consumer behavior better.  While the District Court found that created a prospective risk of harm to the stores, it found the risk was only incremental, not "substantial." Thus, it ordered the information to be turned over.

The USDA alerted the retailers who take part in the SNAP program that it would not appeal, and the Food Marketing Institute stepped in to try to prevent the documents from being disclosed.  In the meantime, the USDA assured them (and the District Court) that it would not turn the documents over until the appeals were exhausted.  However, the U.S. Court of Appeals for the Eighth Circuit affirmed the District Court's decision finding that the potential harm -- while real -- would not be substantial, rejecting any argument that confidentiality alone would be sufficient to satisfy Exemption 4, and reaffirming the application of the National Parks test in the Eighth Circuit.

When the case reached the Supreme Court, it first considered whether the National Parks test should apply at all.  That is, the question presented was whether "the statutory term 'confidential' in FOIA Exemption 4 [should] bear its ordinary meaning, thus requiring the Government to withhold all 'commercial or financial information' that is confidentially held and not publicly disseminated-regardless of whether a party establishes substantial competitive harm from disclosure."  Ultimately, the Supreme Court's answer was yes.

Justice Gorsuch, writing for the six member majority, started his consideration of the scope of Exemption 4 with the language of the statute itself.  The meaning of the key statutory term, "confidential," was the same when FOIA was enacted in 1966 as it is today -- "private" or "secret."  Contemporary dictionaries suggested that confidentiality might therefore require two conditions.  First, it must customarily be kept private (or at least closely held) by the person imparting it.  Second, the person receiving the information must customarily provide an assurance that it will stay secret.  Certainly, the first condition must be satisfied for information to be considered "confidential," it is less clear that the second must also be satisfied.

Here, Justice Gorscuch was untroubled by determining whether confidentiality under Exemption 4 would require both conditions: the requested data unquestionably did.  The Food Marketing Institute had intervened specifically because the individual stores wanted to keep the information secret, and customarily did.  And the USDA had promised the stores that it would keep the information secret, unless it was ordered not to do so.  Thus, the majority found that the information need not be turned over, regardless of what the exact test under Exemption 4 would be.

Despite the clarity of the dictionary definitions, the majority felt the need to address the National Parks test.  It found no basis for the requirement that a disclosure result in "substantial competitive harm" in the statutory language, early case law, or any "other usual source."  The D.C. Circuit had cited legislative history for FOIA in support of the test, but Justice Gorsuch referred to that as a "selective tour through the legislative history."  But the plain language of the statute itself had been sufficient to allow interpretation of Exemption 4.  And there was no good reason for applying the National Parks test when the information was required to be provided to the government, but not when the information was provided voluntarily (as the D.C. Circuit had subsequently found in Critical Mass Energy Project v. NRC, 975 F.2d 871 (D.C. Cir. 1992)).  Thus, the majority rejected the D.C. Circuit's National Parks decision in favor of the plain language of Exemption 4.

Justice Breyer, joined by Justices Ginsburg and Sotomayor, dissented from the decision based primarily on both the uniformity of decisions below and policy issues.  While the courts below had adopted different tests for Exemption 4, they had all required some showing of competitive harm for the exemption to apply.  Thus, the majority's decision allowed Exemption 4 to shield far more than any circuit would have otherwise.  And that was a substantial concern for the dissenting Justices: that Exemption 4 might swallow FOIA whole.  That is, the goal of FOIA has always been disclosure of information to increase the transparency of government (at least as balanced against certain specific, narrow policy exceptions).  But if the questions are just whether the parties providing information and the government agency working with those parties -- which is often subject to "capture" by the parties -- want to keep the information secret, they may be able to shield it from disclosure under FOIA.  Thus, the dissenting Justices fear that the decision will substantially narrow the effect of FOIA.

The Food Marketing Institute case reflects a sea change in the application of FOIA to confidential information.  Previously, even trade secrets (as defined by the traditional definition under the Uniform Trade Secrets Act or Defend Trade Secrets Act) could be subject to disclosure under FOIA if the trade secret owner cannot prove that the disclosure would cause it substantial competitive harm.  Now, Exemption 4 covers not only traditional trade secrets, but also merely confidential business information that has been shared with the government under an expectation of secrecy.  Thus, in many cases, information that would have been disclosed under FOIA can now be withheld under Exemption 4.

Food Marketing Institute v. Argus Leader Media (2019)
Opinion by Justice Gorsuch, joined by Chief Justice Roberts and Justices Thomas, Alito, Kagan, and Kavanaugh; opinion concurring in part and dissenting in part by Justice Bryer, joined by Justices Ginsburg and Sotomayor

[1] 5 U.S.C. § 552(b)(4).
[2] See Argus Leader Media v. United States Dept. of Agriculture, 889 F.3d 914, 915 (8th Cir 2018).

Supreme Court Strikes Down Ban on "Immoral and Scandalous" Trademarks

By Eric R. Moran and Kevin E. Noonan --

On Monday, the U.S. Supreme Court issued an opinion in Iancu v. Brunetti, No. 18-302, finding that the Lanham Act prohibition against registration of scandalous or immoral trademarks violates the First Amendment of the U.S. Constitution.  The Brunetti decision follows closely behind the Court's 2017 opinion in Matal v. Tam, which struck down the Lanham Act's prohibition of disparaging marks under similar First Amendment grounds.

At issue in Brunetti (as in Tam) is 15 U.S.C. § 1052 of the Lanham Act, which defines federally registrable trademarks.  Section 1052(a) provides a number of prohibitions to registration:

No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it—

(a) Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.

At issue in Tam was the "disparagement" prohibition to registration.  Brunetti, however, deals with "immoral" and "scandalous" matter (which the USPTO treats as a unitary provision, instead of treating the two adjectives separately).

In Brunetti, Erik Brunetti sought to register the trademark FUCT for use in connection with a clothing line.  Although, according to Brunetti, the mark is pronounced as four separate letters: F, U, C, T, the U.S. Patent and Trademark Office ("USPTO") read it as "the equivalent of [the] past participle form of a well-known word of profanity."  As such, to determine whether such a mark is "scandalous or immoral" under section 1052(a), the USPTO needed to determine whether a "substantial composite of the general public" would find the mark scandalous, or "shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable; . . . giving offense to the conscience or moral feelings; . . . or calling out for condemnation."  Alternatively, the USPTO could have determined that the mark is scandalous "by establishing that a mark is 'vulgar,'" or "lacking in taste, indelicate, [and] morally crude . . . ."  Under this framework, the USPTO determined that the FUCT mark was "vulgar" and had "decidedly negative connotations," and refused registration under 15 U.S.C. § 1052(a).

On appeal to the Trademark Trial and Appeal Board ("TTAB"), the TTAB reviewed evidence of use of the mark.  The TTAB "found that Brunetti's website and products contained imagery, near the mark, of 'extreme nihilism' and 'antisocial' behavior," and that "the mark communicated 'misogyny, depravity, [and] violence.'"  The TTAB found "no question" that the mark is "extremely offensive," and affirmed the Examining Attorney.

Brunetti appealed the decision of the TTAB to the Court of Appeals for the Federal Circuit ("CAFC").  The CAFC, in turn, found that substantial evidence supported the TTAB's findings that the mark comprises immoral or scandalous material.  The CAFC held further, however, that the Lanham Act's immoral and scandalous prohibition "is an unconstitutional restriction of free speech" and reversed the TTAB's holding that the mark is unregistrable, based on the First Amendment issues decided in Tam.

The Supreme Court affirmed in a 6-3 decision.  Justice Kagan wrote the Brunetti opinion for the Court, and she referred immediately to the Court's decision in Tam that the disparagement clause of section 1052(a) violates the First Amendment's Free Speech Clause.  As a reminder, in Tam, a musician, Simon Tam, applied for federal registration with the USPTO in 2011 for the mark THE SLANTS for use in connection with his Asian-American rock band.  The USPTO found that the mark would be disparaging to those of Asian descent and refused to register the mark.  The U.S. Supreme Court, however, held that the disparagement clause violated the First Amendment "because it discriminated on the basis of viewpoint."

In particular, in Tam, the eight-Justice Court split between two non-majority opinions.  Although the Justices did not agree on the overall framework for deciding the case, they all agreed on two propositions: "First, if a trademark registration bar is viewpoint-based, it is unconstitutional. . . .  And second, the disparagement bar was viewpoint-based."  As summarized in Brunetti, the Court held in Tam that "[t]he government may not discriminate against speech based on the ideas or opinions it conveys."

In Brunetti, the Court turned to these propositions to analyze the "immoral and scandalous" clause of the same Lanham Action provision.  According to the Court, "[i]f the 'immoral or scandalous' bar similarly discriminates on the basis of viewpoint, it must also collide with our First Amendment doctrine."  The question becomes, according to the Court, is the "immoral or scandalous" test viewpoint-neutral or viewpoint-based?

The Court held the USPTO's refusal to register Brunetti's mark was viewpoint-based, and moreover that the "immoral or scandalous" clause of the Lanham Act itself "results in viewpoint-discriminatory application."  The Court pointed out that the USPTO has used the clause to refuse registration of "marks communicating 'immoral' or 'scandalous' views about (among other things) drug use, religion, and terrorism.  But all the while, it has approved registration of marks expressing more accepted views on the same topics."  As examples, the Court cited the USPTO's rejection of marks condoning drug use, such as YOU CAN'T SPELL HEALTHCARE WITHOUT THC for pain-relief medication and MARIJUANA COLA and KO KANE for beverages, while registering marks that disapproved of drug use, such as D.A.R.E. TO RESIST DRUGS AND VIOLENCE and SAY NO TO DRUGS—REALITY IS THE BEST TRIP IN LIFE.

The Court further found that the "immoral or scandalous" bar broadly "covers the universe of immoral or scandalous—or . . . offensive or disreputable—material," and was not moved that some applications of the clause, such as for lewd or profane marks, may be permissible.  Accordingly, despite the government's arguments that the clause's unconstitutional applications are not "substantial" relative to "the statute's plainly legitimate sweep," the Court held that the bar is "substantially overbroad":

There are a great many immoral and scandalous ideas in the world (even more than there are swearwords), and the Lanham Act covers them all.  It therefore violates the First Amendment.

Several Justices wrote opinions at least concurring in part.  Justice Alito concurred in the opinion but wrote separately to distance the Court's decision from what he called "moral relativism" and to assert that "a law banning speech deemed by govern­ment officials to be 'immoral' or 'scandalous' can easily be exploited for illegitimate ends."  He sought comfort in the nostrum that Congress could adopt "a more carefully focused statute" that could restrict registration of marks that contained "vulgar terms that play no real part in the expression of ideas" (which, he indicated, could include the mark at issue before the Court, which he opined "generally signifies nothing except emotion and a severely limited vocabulary").

Chief Justice Roberts concurred in part and dissented in part; the basis for his concurrence is the Court's rejection of the Government's entreaty that the statutory language was "susceptible of a narrowing construction."  While the Chief Justice believes (as does Justice Sotomayor, infra) that the term "scandalous" might be so more narrowly construed, he does not believe the term "immoral" can be, and further believes that "the PTO has long read those terms together to constitute a unitary bar on 'immoral or scandalous' marks."  The Chief Justice dissented, however, because he further asserts that "refusing registration to obscene, vulgar, or profane marks does not offend the First Amendment."

Similarly, Justice Breyer concurred in part and dissented in part.  Like the Chief, Justice Breyer believes that a narrow construction of the term "scandalous" in the statute would save it from constitutional invalidation and cites precedent (United States v. Thirty-seven Photographs, 402 U.S. 363, 369 (1971)) that the Court should do so if it can.  He does not support what he terms "a category-based" approach to applying the First Amendment (i.e., deciding whether the issue involves "viewpoint discrimination," "content discrimination,"  "commercial speech," "government speech," etc.).  Rather, the Justice thinks the Court's rulings based on speech issues should not be "outcome-determinative" but instead be treated as "rules of thumb" (a standard he first enunciated in Reed v. Town of Gilbert, 576 U. S. ___, ___ (2015) (opinion concurring in judgment)).

Those "rules of thumb" would then be applied in view of the values the First Amendment was intended to protect; the case at bar represents, for Justice Breyer, a statue that "does not fit easily into any of [the Court's speech] categories."  Trademarks are not merely commercial speech nor government speech, in the Justice's view, nor does a trademark implicate the speech concerns related to a "public forum" like a public park or a street.  And as for the "viewpoint" distinction the majority bases its decision upon, Justice Breyer thinks "it is hard to see how a statute prohibiting the registration of only highly vulgar or obscene words discriminates based on 'viewpoint'."

Applying his "first principles" analysis in agreeing with Justice Sotomayor, Justice Breyer is persuaded that the "injury" to speech (forgoing a federal registration on a trademark that is protected by use and common law) is not much of an injury.  Trademark law already imposes limits, inter alia, on deceptive speech, and for the Justice, the government's right to impose those limits should inform a potential registrant "not [to] expect complete freedom to say what she wishes, but [] instead expect linguistic regulation."  The consequences of permitting (and by permitting, encouraging) trademark registration on such marks may, the Justice proposes, be contrary to the government's legitimate interest in disincentivizing the (presumably) negative consequences caused by the words making up such marks.

Justice Sotomayor dissented, joined by Justice Breyer (to the extent her reasoning is consistent with his opinion).  Justice Sotomayor sets forth her concerns immediately in her opinion:

The Court's decision today will beget unfortunate re­sults.  With the Lanham Act's scandalous-marks provi­sion, 15 U.S.C. § 1052(a), struck down as unconstitutional viewpoint discrimination, the Government will have no statutory basis to refuse (and thus no choice but to begin) registering marks containing the most vulgar, profane, or obscene words and images imaginable.

Justice Sotomayor would square the statutory language with the constitutional imperatives by interpreting the statute as having two types of prohibitions and construing it to exclude scandalous marks that constitute "obscenity, vulgarity, and profanity."  This would render the language "a reasonable, viewpoint-neutral restriction on speech that is permissible in the context of a beneficial governmental initiative like the trademark-registration system."  The Justice argues for considering the statutory words in context, and uses the occasion to provide a pellucid example of elegant language by Judge Learned Hand:  "Words are not pebbles in alien juxtaposition; they have only a com­munal existence; and not only does the meaning of each interpenetrate the other, but all in their aggregate take their purport from the setting in which they are used.'" NLRB v. Federbush Co., 121 F. 2d 954, 957 (CA2 1941).

In the context of the statutory language here, Justice Sotomayor sees her way clear to distinguish excluding "immoral" marks (which are view-point implicating and thus unconstitutional) with "scandalous" marks (which at least may not be and thus do not render the statute facially unconstitutional as Petitioner Brunetti argued).  Finding ample precedent for such distinctions based in construing statutory language, Justice Sotomayor concludes the Court was not compelled to reach its decision, from which she dissented.

Iancu v. Brunetti (2019)
Opinion by Justice Kagan, joined by Justices Thomas, Ginsburg, Alito, Gorsuch, and Kavanaugh; concurring opinion by Justice Alito; opinion concurring in part and dissenting in part by Chief Justice Roberts; opinion concurring in part and dissenting in part by Justice Breyer; opinion concurring in part and dissenting in part by Justice Sotomayor, joined by Justice Breyer

Top 50 NIH-Funded Research Institutions FY2019

By Kevin E. Noonan --

Genetic Engineering News published the results of a study on Monday entitled "Top 50 NIH-Funded Institutions of 2019."  The report sets forth the context of these expenditures, with the Trump administration proposing large cuts in funding (12%, to a total outlay of $34.368 billion in Fiscal 2020) and Congress pushing back on any reductions (the House passed an appropriations bill allocating $41.084 billion, or a 5.12% increase and the Senate seems to be looking to follow suit).  And where does the money go?  The report states that 83% of that budget goes to fund extramural research, with FY2018 showing 47,000 grants awarded to 2,700 institutions in the amount of $26 billion.  This is in addition to supporting 6,000 scientists on the NIH campus.

The remainder of the report shows the statistics for the 50 top "universities (including medical schools), research institutions, and teaching hospitals" for FY2019 through May 27th in dollars and number of grants awarded.  Not surprisingly, California has the most Federally granted institutions (7), with Massachusetts and New York ranking next with six apiece.  The report notes that these three states have 19 of the top 50 (38%) funded institutions.  Ohio is next with three institutions on the list, and seven states with two (Illinois, Maryland, Minnesota, North Carolina, Pennsylvania, Texas, and Washington).  Twenty-six states have no university or other research institution on the list, but the report notes that these states also receive a significant amount NIH research money.

Top 50 NIH-Funded Institutions of 2019

Supreme Court to Revisit Abrogation of State Sovereign Immunity From IP Infringement

By James Lovsin --

Under the Eleventh Amendment of the Constitution, States enjoy sovereign immunity from a wide variety of suits.  But there are exceptions, including congressional abrogation of immunity.  Twenty years ago, in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999), the Court struck down the Patent Remedy Act that abrogated state sovereign immunity from patent infringement:

Any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State acting in his official capacity, shall not be immune, under the eleventh amendment of the Constitution of the United States or under any other doctrine of sovereign immunity, from suit in Federal court by any person, including any governmental or nongovernmental entity, for infringement of a patent under section 271, or for any other violation under this title.

35 U.S.C. § 296(a); see also id. § 271(h).

The Court in Florida Prepaid held that Congress did not have the authority to abrogate immunity from patent infringement under various provisions in the Constitution, including the Patent Clause, Commerce Clause, and the Fourteenth Amendment.  Art. I, § 8, cl. 8; id. cl. 3; and § 5 of the 14th amend.

This week, the Court granted to certiorari in Allen v. Cooper, No. 18-877 to consider the abrogation issue, again, in the context of copyright law.  In this case, Mr. Allen sued North Carolina for infringing his copyright in a documentary film related to the salvage of Blackbeard's ship, Queen Anne's Revenge.  The District Court denied the State's motion to dismiss for sovereign immunity, relying on the 1990 Copyright Remedy Act, which is substantially identical to the Patent Remedy Act:

Any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State acting in his or her official capacity, shall not be immune, under the Eleventh Amendment of the Constitution of the United States or under any other doctrine of sovereign immunity, from suit in Federal court by any person, including any governmental or nongovernmental entity, for a violation of any of the exclusive rights of a copyright owner provided by sections 106 through 122, for importing copies of phonorecords in violation of section 602, or for any other violation under this title.

17 U.S.C. § 511(a).  In doing so, the District Court broke with the Fifth Circuit and several district courts throughout the country that have ruled the statute is invalid.

The Fourth Circuit reversed.  The Fourth Circuit found that its "conclusion is required by Florida Prepaid."  895 F.3d 337, 351 (4th Cir. 2018).  As in Florida Prepaid, the Fourth Circuit ruled that Congress did not have the authority to abrogate immunity from copyright infringement under the Copyright Clause, Commerce Clause, and Section 5 of the Fourteenth Amendment.

The Fourth Circuit rejected Allen's reliance on a 2006 Supreme Court case, Central Virginia Community College v. Katz, 546 U.S. 356, in which the Court upheld abrogation of state sovereign immunity under the Bankruptcy Clause.  According to the Fourth Circuit, Katz's holding "was made in a completely distinguishable context that was unique to the Bankruptcy Clause."  895 F.3d at 348.

It is interesting that the Court decided to grant cert. in Allen v. Cooper.  Lower courts that have addressed copyright abrogation appear to have uniformly followed Florida Prepaid.  But the composition of the Court has significantly changed since Florida Prepaid was decided.  Florida Prepaid was decided by a 5-4 majority in 1999 and only one Justice from the majority, Justice Thomas, remains on the Court.  Similarly, only two of the dissenting Justices in Florida Prepaid remain on the Court, Justices Ginsburg and Breyer.

The Court's grant of cert. in Allen v. Cooper also stands in contrast to the Court's denial of cert. in April in the tribal immunity case Saint Regis Mohawk v. Mylan Pharmaceuticals, No. 18-899.  There, the Federal Circuit ruled that the Tribe was not immune from inter partes review in the Patent Trial and Appeal Board.

Given the Copyright Remedy Act and Patent Remedy Act are substantively identical, the Court's decision in Allen v. Cooper could have an impact on patent law.  States frequently participate in the patent system and are often litigants in district courts as well as the PTAB.

The Federal Circuit is currently deciding such a state sovereign immunity case.  In Regents of University of Minnesota v. LSI Corp., No. 18-1559, the PTAB majority ruled that the State waived immunity from IPR by filing an infringement suit in district court.  In concurrence, another judge explained that states do not have any immunity from IPR.  The Court heard oral argument in Regents in March.

Patent Docs will monitor Allen v. Cooper and provide updates the case progresses.

Momenta Pharmaceuticals, Inc. v, Bristol-Myers Squibb Co. (Fed. Cir. 2019)

By Kevin E. Noonan --

The Federal Circuit has on several occasions taken the opportunity to address (and in doing so, flesh out) the requirements for Article III standing to appeal an adverse determination in a post-grant review proceeding (post-grant review, inter partes review, and covered business method patent review) against a Petitioner (loss of patent claims typically provides sufficient injury for a Patent Owner to have standing).  See, for example, Consumer Watchdog v. Wisconsin Alumni Research Foundation; Phigenix, Inc. v. ImmunoGen, Inc.; E. I. du Pont de Nemours & Co. v. Synvina C.V.; and most recently, Amerigen Pharmaceuticals Ltd. v. UCB Pharma GmbH.  But the Court has not had a clearer factual basis for deciding that a failed Petitioner did not have standing under Article III than in Momenta Pharmaceuticals v. Bristol-Myers Squibb, decided today.

The case involved a inter partes review (IPR) brought by Momenta against all claims of U.S. Patent No. 8,476,239 having claims reciting "specific fluid formulations of the protein molecule CTLA4Ig (cytotoxic T-lymphocyte associated protein 4 immunoglobulin)."  These formulations were used to treat, inter alia, rheumatoid arthritis, having the generic name abatacept and sold by BMS as Orencia^®.  The PTAB instituted but sustained the patentability of all claims.  This appeal followed.

However, certain additional facts outside the basis for the PTAB's decision were relevant to the decision reached by the panel.  While not needing to establish standing to petition for IPR, Momenta at that time was pursuing research for the development of a biosimilar version of Orencia^®.  However, during the course of the IPR trial, Momenta's biosimilar candidate failed clinical testing and was withdrawn by Momenta from FDA review.  BMS moved to dismiss the appeal on the grounds that these actions deprived Momenta of standing, insofar as there was no prospect of injury if Momenta was not pursuing its biosimilar.  The Court heard argument on the motion as well as the merits and retired to confer.

While conferring, Momenta brought two other facts to the Court's attention.  First, on October 18, 2018 (after oral argument), Momenta filed a Letter to the Court (permitted under Fed. R. App. P. 28(j)) along with a press release, informing the Court that Momenta had "has initiated discussions with its collaboration partner, Mylan, to exit its participation in the development of its other five biosimilar programs including M834, a proposed biosimilar to ORENCIA® . . . ."  This prompted the Court to issue an Order to Show Cause (on October 23rd) why the Court should not dismiss the appeal.  Ten days later Momenta responded that:

As of today, the companies continue to be jointly responsible under that agreement for product development and for sharing the costs of that development, which are substantial.  And because of BMS's patent and the Board's decision upholding it, Momenta and its partner Mylan still face the same fork in the road about the commercial formulation for their biosimilar product—they must decide whether to proceed with the current formulation or switch to a more expensive and potentially less commercially viable option.  That decision and the costs associated with it still turn on the outcome of this appeal.

Momenta's response was supported by a declaration from its Chief Business Officer that the parties had not reached a decision whether to terminate the Orencia^® biosimilar development program.  In addition, Momenta asserted its "economic interest" in any Orencia^® biosimilar that might be developed by Mylan, which included "potential right to royalties."  A little more than a month later, on December 10th, Momenta filed another letter with the Court, informing the panel of a Preliminary Prospectus Supplement and Form 8-K filed with the Securities and Exchange Commission four days before, which notified the SEC and prospective investors that:

We have elected to terminate our collaboration agreement with Mylan with respect to the development of . . . M834, a proposed biosimilar to ORENCIA® . . . .  On November 19, 2018, we delivered a formal notice of this partial termination to Mylan, as provided in the collaboration agreement.

Momenta made no response to BMS's further argument that the appeal was mooted by these developments, nor did the company withdraw its appeal.

Judge Newman rendered the Court's decision, joined by Judges Dyk and Chen.  Calling the "constitutional limitation of federal-court jurisdiction to actual cases or controversies" the most fundamental principle defining the judiciary's proper role, citing Raines v. Byrd, 521 U.S. 811, 818 (1997), the opinion addressed Momenta's argument that the requirement for standing for judicial review of agency decisions was "relaxed" relative to district court litigation.  These requirements are that an appellant must have "(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision."  Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016)).  The panel recognized that some relaxation has been recognized, for example in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) and Massachusetts v. E.P.A., 549 U.S. 497, 517–18 (2007).  Indeed, the Supreme Court has held that "[p]arties that initiate the [Inter Partes Review] proceeding need not have a concrete stake in the outcome; indeed, they may lack constitutional standing" in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131, 2143–44 (2016).

But that relaxation does not extend to the requirement of "injury in fact," which is a hard floor of Article III jurisdiction that cannot be removed by statute, citing Summers v. Earth Island Institute, 555 U.S. 488 (2009).  The basis for this "hard floor, according to the opinion, is that without it courts would be reduced to writing advisory opinions.  Congress does not have the power to do so by statute, as recognized in Consumer Watchdog v. Wis. Alumni Research Found. and Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 100 (1979).  Under the facts as they had developed, Momenta was unable to show "'an invasion of a legally protected interest' that is 'actual or imminent, not conjectural or hypothetical'" as required under the Supreme Court's Lujan decision.

Momenta's alternative argument, that the estoppel provisions of IPR proceedings under 35 U.S.C. § 315(e), were similarly unavailing in the face of evidence that Momenta was not longer engaging in activity that could lead to infringement liability.  The argument that Momenta might be injured "at some future time" if Mylan developed an Orencia^® biosimilar from the sale of which Momenta would be entitled to royalties was too attenuated to provide injury-in-fact, the opinion citing Clapper v. Amnesty Int'l USA, 568 U.S. 398, 414 n.5 (2013), that a plaintiff "cannot rely on speculation about the unfettered choices made by independent actors" not before the court.  Momenta's position was contrary to several Federal Circuit decisions on standing for appealing PTAB decisions, including Consumer Watchdog, Phigenix, Inc. v. Immunogen, Inc., and RPX Corp. v. ChanBond LLC, No. 17–2346, ECF 39 (Fed. Cir. Jan. 17, 2018).  In cases where lacking a product on the market was not enough to preclude Article III standing, the petitioner had "concrete plans for future activity that creates a substantial risk of future infringement," JTEKT Corp. v. GKN Automotive Ltd., 898 F.3d 1217, 1220–21 (Fed. Cir. 2018), or the parties were "direct competitors and were in commercial dispute" and the petitioners faced "a significant risk of patent infringement in their demonstration plant that was entering into operation," E.I. DuPont de Nemours & Co. v. Synvina C.V., 904 F.3d 996, 1005 (Fed. Cir. 2018).  None of these facts were present here.

And while recognizing that "[s]tanding and mootness may not be coextensive in all cases," none of the exceptions ("when the issue has avoided review and is likely to be repeated, or when the defendant voluntarily ceased the challenged activity and the plaintiff seeks to preserve its win") applied here.  Accordingly, the Court dismissed the appeal as moot.

Momenta Pharmaceuticals, Inc. v, Bristol-Myers Squibb Co. (Fed. Cir. 2019)
Panel: Circuit Judges Newman, Dyk, and Chen
Opinion by Circuit Judge Newman

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A Glimmer of an Idea on an Experimental Use Exemption

By Kevin E. Noonan --

One of the most powerful, visceral arguments made by the American Civil Liberties Union in Assoc. Molecular Pathol. v. Myriad Genetics, 689 F. 3d 1303 (2013), was that permitting Myriad and the University of Utah to have patent rights to isolated human DNA inhibited basic research.  Indeed, the meme that patents can interfere with free access to the "building blocks" of science and technology can be found in Supreme Court dicta from Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), to Myriad and Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012).  Similarly, opponents of the Bayh-Dole Act (codified at 35 U.S.C. §§ 200-212), which permits universities to patent inventions made using Federal funding, base some of their arguments on the inequity visited on the public in allowing these inventions to be protected by patent and thus (at least technically) making scientific and research use an act of infringement.

These concerns were exacerbated by the Federal Circuit decision in Madey v. Duke Univ., 307 F.3d 1351 (Fed. Cir. 2002), where the Court agreed that the practice of a patented invention by Duke University researchers was not protected by an "experimental use" exemption.  In doing so, the Court recharacterized the nature of such scientific use by universities, ostensibly based on the "commercial" nature of modern university practice:

In short, regardless of whether a particular institution or entity is engaged in an endeavor for commercial gain, so long as the act is in furtherance of the alleged infringer's legitimate business and is not solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry, the act does not qualify for the very narrow and strictly limited experimental use defense.  Moreover, the profit or non-profit status of the user is not determinative.

This decision cabined the (common law) experimental use exemption to activities akin to the Victorian practice of observing with crude microscopes rotifers in a drop of pond water as an after-dinner amusement amongst gentlemen.  The Court's reasoning was set forth as follows:

Our precedent clearly does not immunize use that is in any way commercial in nature.  Similarly, our precedent does not immunize any conduct that is in keeping with the alleged infringer's legitimate business, regardless of commercial implications.  For example, major research universities, such as Duke, often sanction and fund research projects with arguably no commercial application whatsoever.  However, these projects unmistakably further the institution's legitimate business objectives, including educating and enlightening students and faculty participating in these projects.  These projects also serve, for example, to increase the status of the institution and lure lucrative research grants, students and faculty.

Regardless of the practicality of these distinctions, there the law has rested ever since, and it is generally recognized that there is no effective experimental use exemption under U.S. patent law.

There are, of course, exemptions to infringement liability in the statute; for example, 35 U.S.C. § 287(c) provides:

(1) With respect to a medical practitioner's performance of a medical activity that constitutes an infringement under section 271(a) or (b), the provisions of sections 281, 283, 284, and 285 shall not apply against the medical practitioner or against a related health care entity with respect to such medical activity.

where

"medical activity" means the performance of a medical or surgical procedure on a body, but shall not include (i) the use of a patented machine, manufacture, or composition of matter in violation of such patent, (ii) the practice of a patented use of a composition of matter in violation of such patent, or (iii) the practice of a process in violation of a biotechnology patent.

"medical practitioner" means any natural person who is licensed by a State to provide the medical activity described in subsection (c)(1) or who is acting under the direction of such person in the performance of the medical activity.

"body" shall mean a human body, organ or cadaver, or a nonhuman animal used in medical research or instruction directly relating to the treatment of humans.

And the exemption does not apply to activities directly related to "commercial development, manufacture, sale, importation, or distribution of a machine, manufacture, or composition of matter or the provision of pharmacy or clinical laboratory services (other than clinical laboratory services provided in a physician's office)," and "regulated under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, or the Clinical Laboratories Improvement Act."

Since the Madey decision there has been no traction for expanding the statutory exemption beyond the scope of § 287(c), but the Court's Madey decision itself provides a possible hint at a path forward.  In footnote 6 of the opinion, the Court states (citing footnote 3 in the District Court's opinion):

In a footnote, the district court cites to a section from the Bayh-Dole Act to support its reasoning that the government has a license to have patents practiced on its behalf when the government contributed to the funding of such patents.  Id. at 16 n. 3 (citing 35 U.S.C. § 202(c)(4) (2000)).  The relevant section is set forth below.

(c) Each funding agreement with a small business firm or nonprofit organization shall contain appropriate provisions to effectuate the following: (4) With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world․  35 U.S.C. § 202(c)(4) (2000).

The district court stated that the "funding agreements for the inventions created under the ′994 and ′103 patents[-in-suit] expressly provide that the Government retained rights in those inventions."  Id.  Thus, the district court reasoned, in light of the Bayh-Dole Act, Duke's use of the patents that has been authorized by the government does not constitute patent infringement.  Finally, the district court noted that: "[a]lthough the parties have presented conflicting evidence as to the extent to which the patented devices have been used for a purpose consented to by the Government, because [Madey] has failed to create a genuine issue of material fact as to whether [Duke] has commercially benefited or intends to do so with respect to the patents at issue, the uses that have been made to date with respect to both patents are, at this point, exempt from infringement liability."  Id.

The Bayh-Dole Act itself expressly provides limits and direction on how technology patented and licensed by universities under its provisions should behave; for example, in 35 U.S.C. § 204:

Notwithstanding any other provision of this chapter, no small business firm or nonprofit organization which receives title to any subject invention and no assignee of any such small business firm or nonprofit organization shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States [subject to waiver under conditions where this proscription cannot be carried out].  (Added Pub. L. 96–517, § 6(a), Dec. 12, 1980, 94 Stat. 3023.)

This suggests a possible avenue to enact at least a partial experimental use exemption for the members of society most impacted by even technical liability for infringement (i.e., university researchers, where the overwhelming amount of such technical infringement occurs).  Specifically, Congress could amend the Bayh-Dole Act to provide that licenses of university technologies contain, and the universities themselves be bound to grant, non-exclusive licenses to use patented technology to university researchers for non-commercial purposes:

Any patent subject to the provisions of this title, and any license to any such patent granted to any commercial entity, shall be subject to a non-exclusive license to practice the patented invention for non-commercial research purposes by researchers of a U.S. university, non-profit organization, or other scientific research institute.

The statute would be limited to university patents and to university or other research institutes or organizations, but it is precisely these patents and these entities purportedly most negatively affected by the present existence of technical infringement liability (and were the entities involved in Madey v. Duke).  The proposed statutory change is not intended to be a panacea, but its existence could ameliorate the angst felt by lawmakers and the judiciary (as well as policymakers and pundits) by the possible chilling effect of patenting on innovation.  Make no mistake, the evidence is scant that there has been any such chill; after all, the poster child for the effects of this behavior, the Myriad gene patents, had tens of thousands of scientific papers published from grant to invalidation by the Supreme Court and Federal Circuit (see "In Defense of Patenting").  But to the extent that this is a genuine issue, actual or potential, having a statutory shield for any possible misbehavior by patentees (and their licensees) might influence policymakers to be less mindful of the rhetoric and more cognizant of the benefits of almost forty years of technology transfer under the Bayh-Dole Act.

CDC and DOD Prepare for Zombie Apocalypse

By Donald Zuhn –-

While the U.S. Patent and Trademark Office has yet to receive any patent applications describing  inventions for dealing with a widespread rise of zombies (other than hi-tech "zombie" servers, virtual machines, processes, etc.), the Centers for Disease Control and Prevention (CDC) and U.S. Department of Defense (DOD) have taken steps to prepare for a zombie apocalypse.

The CDC website, for example, provides information on zombie preparedness.  Products listed on the page include links to a Zombie Preparedness Blog and Zombie Preparedness for Educators.  The CDC's Zombie Preparedness Blog advises that "[t]here are all kinds of emergencies out there that we can prepare for," including "a zombie apocalypse," and notes that "[y]ou may laugh now, but when it happens you'll be happy you read this, and hey, maybe you'll even learn a thing or two about how to prepare for a real emergency."  The blog provides a brief history of zombies and includes a list of items for an emergency kit.  The CDC notes that "what first began as a tongue-in-cheek campaign to engage new audiences with preparedness messages has proven to be a very effective platform," and therefore, the CDC continues "to reach and engage a wide variety of audiences on all hazards preparedness via 'zombie preparedness'."  The CDC even provides a graphic novel, entitled "Preparedness 101: Zombie Pandemic," which demonstrates the importance of being prepared before disaster (actual rather than fictional) strikes.

The CDC is not alone in preparing for a zombie apocalypse, as reported in a History Channel article (see "Are You Prepared for a Zombie Apocalypse? The U.S. Government Is").  In 2011 (coincidentally, the same year that the CDC began its zombie preparedness campaign), the DOD released a strategy to combat a potential zombie apocalypse – CONPLAN 8888-11.  The plan states that it "was not actually designed as a joke."  Of course, the rest of the plan's disclaimer explains that:

During the summers of 2009 and 2010, while training augmentees from a local training squadron about the JOPP [Joint Operation Planning Process], members of a USSTRATCOM [U.S. Strategic Command] component found out (by accident) that the hyperbole involved in writing a "zombie survival plan" actually provided a very useful and effective training tool.  Planners who attended JPME II at the Joint Combined Warfighting School also realized that training examples for plans must accommodate the political fallout that occurs if the general public mistakenly believes that a fictional training scenario is actually a real plan.  Rather than risk such an outcome by teaching our augmentees using the fictional "Tunisia" or "Nigeria" scenarios used at JCWS, we elected to use a completely-impossible scenario that could never be mistaken as a real plan.

Although the zombie apocalypse is confined to the small and big screens, both the CDC and DOD have found ways to use the extremely popular zombie genre to prepare people for real-life disasters and explore the basic concepts of plan and order development.

Cai v. Diamond Hong, Inc. (Fed. Cir. 2018)

By Joseph Herndon --

Zheng Cai DBA Tai Chi Green Tea Inc. appealed an opinion of the U.S. Patent and Trademark Office Trademark Trial and Appeal Board (TTAB) cancelling registration of his mark "WU DANG TAI CHI GREEN TEA" due to a likelihood of confusion with Diamond Hong, Inc.'s registered mark, "TAI CHI," pursuant to 15 U.S.C. § 1052(d) (2012).

The Federal Circuit affirmed the decision, and despite the two marks (shown below) looking substantially different in appearance at first glance, other factors weighed in favor of the cancellation.

Section 1052(d) provides that a trademark may be refused if it consists of or comprises a mark which so resembles a mark registered in the USPTO, or a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive (15 U.S.C. § 1052(d)).

In Application of E.I. DuPont DeNemours & Co., the Court articulated thirteen factors to consider when determining likelihood of confusion (DuPont factors).  Not all of the DuPont factors are relevant to every case, and only factors of significance to the particular mark need be considered.

The thirteen factors are as follows:  (1) similarity of the marks; (2) similarity and nature of goods described in the marks' registrations; (3) similarity of established trade channels; (4) conditions of purchasing; (5) fame of the prior mark; (6) number and nature of similar marks in use on similar goods; (7) nature and extent of actual confusion; (8) length of time and conditions of concurrent use without evidence of actual confusion; (9) variety of goods on which mark is used; (10) market interface between applicant and owner of a prior mark; (11) extent to which applicant has a right to exclude others from use of its mark; (12) extent of potential confusion; and (13) any other established probative fact on effect of use.

Between the two marks, in its likelihood of confusion analysis, the TTAB considered the first three DuPont factors, treating the remainder as neutral because neither party submitted evidence related to them.

Mr. Cai argued that the TTAB improperly weighed these three DuPont factors to arrive at an incorrect conclusion regarding likelihood of confusion. A summary of the analysis of these factors is included below.

1.  Similarity of the nature of the goods

With respect to the similarity and nature of the goods, the goods covered by each mark overlap.  Mr. Cai's WU DANG TAI CHI GREEN TEA mark identifies the goods as "Green tea; Tea; Tea bags."

In turn, among many goods identified in its registration, Diamond Hong's TAI CHI mark identifies "tea."  Given this plain overlap, the TTAB's determination that the parties' goods are identical in part is supported by substantial evidence.

2.  Similarity of established trade channels

With respect to similarity of the established trade channels through which the goods reach customers, the TTAB followed case law and presumed that the identical goods move in the same channels of trade and are available to the same classes of customers for such goods—here, general consumers who consume or purchase tea.

Since the marks cover identical goods (tea), this presumption attaches.  Mr. Cai failed to produce evidence to rebut this presumption.

3.  Similarity of the marks

With regard to the similarity of the marks themselves, the TTAB must examine the similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression.

The Federal Circuit noted that the proper test is not a side-by-side comparison of the marks, but instead whether the marks are sufficiently similar in terms of their commercial impression such that persons who encounter the marks would be likely to assume a connection between the parties.

Where the goods at issue are identical, the degree of similarity necessary to support a conclusion of likely confusion declines.

Here, the marks were considered similar by the Federal Circuit, when considered as a whole, because they both invoke a large yin-yang symbol and prominently display the term TAI CHI.

Specifically, the WU DANG TAI CHI GREEN TEA mark to Mr. Cai is described as follows:  the color(s) green and white is/are claimed as a feature of the mark, and the mark consists of a circle outlined in green, that divides to be half green and half white, with a single dot located at each half with the opposite color; on the top of the mark, it has words "Tai Chi Green Tea"; at the bottom of the mark, it has words "Wu Dang."  The mark is reproduced below.

Similarly, the TAI CHI mark of Diamond Hong is presented in the following terms:  the mark consists of a man engaged in a tai chi position atop a yin-yang symbol with the term "Tai Chi" below the symbol and a Chinese character on each side of the symbol.  The mark is reproduced below.

The Federal Circuit noted that color is not claimed as a feature of Diamond Hong's mark, and this further highlights the likelihood of confusion because, as the TTAB correctly identified, Diamond Hong's mark could be presented in a green-and-white color scheme like Mr. Cai's mark.

The Federal Circuit agreed with the TTAB's findings as to the DuPont factors, and found that the findings were supported by substantial evidence.  Thus, the Federal Circuit affirmed the Opinion of the U.S. Patent and Trademark Office's Trademark Trial and Appeal Board.

Despite the two marks looking quite different, the DuPont factors weighed heavily in factor of cancellation of Mr. Cai's mark since the nature of goods described in the marks' registrations were identical and the established trade channels were identical.

There were other DuPont factors that Mr. Cai could have perhaps argued, however, he encountered errors through submission of evidence, and further briefs by Mr. Cai were not considered.

Cai v. Diamond Hong, Inc. (Fed. Cir. 2018)
Panel: Chief Judge Prost and Circuit Judges Wallach and Hughes
Opinion by Circuit Judge Wallach

ABA Provides Guidance on Required Disclosure of Attorney Errors

By Josh Rich --

On April 17th, the American Bar Association provided a formal opinion regarding the requirement that attorneys disclose errors to clients.  Its opinion was based on Rule 1.4 of the Model Rules of Professional Conduct, which governs communications with clients.  The ABA concluded that attorneys have a duty to disclose material errors to clients, but no duty to disclose errors to former clients.  In this context, an error is material if a disinterested attorney would believe that the error would likely cause harm or prejudice to the client, or that the error would reasonably cause a client to consider terminating the practitioner's representation -- even if there would be no prejudice to the client.

Rule 1.4 of the Model Rules of Professional Conduct is the widely-adopted basis for the duty of disclosure to clients.  Forty-nine of the fifty states have adopted versions of the Model Rules of Professional Conduct, along with the U.S. Patent and Trademark Office and four of the five U.S. territories.[1]

The U.S. Patent and Trademark Office's version of Model Rule 1.4 reads:

(a) A practitioner shall:
    (1) Promptly inform the client of any decision or circumstance with respect to which the client's informed consent is required by the USPTO Rules of Professional Conduct;
    (2) Reasonably consult with the client about the means by which the client's objectives are to be accomplished;
    (3) Keep the client reasonably informed about the status of the matter;
    (4) Promptly comply with reasonable requests for information from the client; and
    (5) Consult with the client about any relevant limitation on the practitioner's conduct when the practitioner knows that the client expects assistance not permitted by the USPTO Rules of Professional Conduct or other law.
(b) A practitioner shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

37 C.F.R. § 11.104.  The obligation to disclose errors arises primarily out of sections (a)(1) and (a)(3), but also relies upon sections (a)(2) and (a)(4).  Specifically, a material error is the sort of information that forms an important part of the status of a case or matter and would lead the client to have to make informed decisions.  In light of those provisions, numerous states (both courts and bar associations) have found that an attorney has an obligation to disclose any errors that could cause prejudice to a client, underlie an ethics complaint, or give rise to a malpractice claim.

The ABA found that the obligation of disclosure would go further, however.  Even if there is no prejudice to the client, it concluded that there would be a duty to disclose errors that an independent, disinterested attorney would believe would cause a reasonable client to lose confidence in the erring practitioner.  Notably, no jurisdiction has yet found such an obligation of disclosure, and the issue would not come up in the context of a malpractice case.  However, it could come up in the context of an ethics complaint, and the risk of non-disclosure (or covering up) a non-prejudicial error is likely greater than the cost of disclosing it with an explanation.

In determining the scope of the obligation of disclosure, however, the ABA found a clear limit.  Namely, the obligation to disclose extends only to current clients.  Rule 1.4 describes the obligation of communication as relating to a "client," not to former clients.  As a result, if the error is not identified until after the representation ends -- and the representation has been terminated in accordance with Rule 1.16 -- there is no obligation to disclose an error.  There may be practical reasons, such as goodwill or business development, for such a disclosure, but there is no ethical obligation under this ABA opinion.

Thus, the ABA has drawn a clear division between current and former clients with regard to the disclosure of errors.  For a current client, a practitioner must disclose errors that a reasonable, disinterested practitioner would believe (a) would be reasonably likely to harm or prejudice the client or (b) would reasonably cause the client to consider terminating the representation.  For former clients, as long as the representation has been properly terminated, there is no ethical duty to disclose any errors whatsoever.

[1] California has not adopted the Model Rules, but has a provision analogous to Rule 1.4 in its rules.  Furthermore, the bar has proposed adoption of the Model Rules to the California Supreme Court.  The only territory that has not adopted the Model Rules is Puerto Rico.